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I'm going to risk sounding a little smarmy. That looks like a nice enough bike - why not just replace the brakes with something safe and go riding? That would be the cheapest way to get a decent bike. A little bar tape would go a long way, too. As for converting it - sure. But please understand that converting on the cheap is largely a do-it-yourself affair. Reading Mr. Sheldon Brown is part of that. Lots of folks here can help but no one can teach you how to do a $200 conversion that will be safe, fit you well and you will enjoy in a short paragraph. It's not rocket science but you have to be willing to invest your own time and effort (along with the money you've said you are willing to use) into your project. The advice I'm about to give is top notch - go to Mr. Sheldon Brown's site, read it thoroughly, formulate ideas based on your newfound information and then you'll be able to come back here with a much better set of questions. Again, I'm not cheap-shotting you. I'm just pointing out that your project requires your input and the good folks here can add polish in the form of experience and hard earned knowledge when you have more pointed questions based on a little homework. You came to the right place. Just a little up-front work will go a long way towards making your desires come to fruition.